Under the measures, Allied Irish Banks (AIB) will become virtually nationalised by the end of February, hoovering up about €5.3bn of fresh state cash in the process.

Bank of Ireland (BoI) will be given €2.2bn of state cash at the end of February, unless it can raise the money on the private markets first. The State's stake in BoI could rise to more than 80pc.

State-owned Anglo Irish Bank and Irish Nationwide are drawing up a joint restructuring plan that could see them pass over about €16bn of deposits to AIB and BoI. All banks, including Irish Life & Permanent (IL&P), which says it does not need state cash, will have to sell off assets and become smaller businesses.

NAMA is taking on an extra €16.6bn of loans from AIB and BoI. This brings the total of the loans going to NAMA to €90bn.

"The programme provides for a downsizing and reorganisation of the banking sector so it is proportionate to the size of the economy," Taoiseach Brian Cowen said last night.

The €35bn in support includes €8bn that can be used to help banks meet new demands laid down by the Central Bank last night.

The demands force the banks to hold €12 in reserve for every €100 they loan out, so they're able to deal with loan defaults. Current rules mean they have to hold just €8.

Between them, the banks need an extra €8bn to get to the €12 target. IL&P only needs €100m and says it can raise the cash internally, while BoI said it "intends" to raise €2.2bn from private sources. This means the final cost is likely to be below the €8bn budgeted.

Contingency

The Government has provided for another €2bn in "immediate" support that will help the banks wean themselves off deposits on short-term wholesale money markets.

The remaining €25bn is a "contingency" fund that can be called upon to fund any unforeseen future losses or help the banks meet any future Central Bank demands.

Sources last night stressed that asset sales were a key part of the package, and the Central Bank is asking all institutions to draw up a list of disposals.

In a statement, the Government said the banks would be required to sell "non-core assets" if this was "needed". "Non-core" refers to all assets beyond Irish banking.

Nama is also taking on €16.6bn of development loans worth less than €20m from AIB and BoI. The Government is expected to bring forward new legislation that will allow most of these loans to be transferred in "blocks" and analysed as a group. So far, all Nama loans have been treated on a costly loan-by-loan basis.

The Government hopes to have the extra €16.6bn of Nama loans transferred over by the end of March.

Meanwhile, Anglo and Irish Nationwide are set to submit a draft plan to the European Commission over the coming weeks.

The plan will focus on how the two failed institutions can be "useful" to the restructuring of the sector and will suggest handing over their €15bn in deposits to the other banks.

These high-quality deposits would make AIB and BoI stronger institutions.